Lack of details may delay farm loan waiver plan

NEW DELH: The government may miss the June deadline for its farm loan waiver scheme as banks are still clueless about eligibility conditions for the scheme. These banks have lakhs of small farm accounts on their books and they need adequate time to authenticate the beneficiaries of this scheme. Although Nabard has sent suggestions to the finance ministry, the details of the scheme are yet to be worked out. It is understood Nabard has recommended that farmers with land holding up to 5 hectares should be eligible for the scheme as against 1-2 hectares as suggested by the government.

With little over a month to go for the implementation of the scheme, the government may miss the June 30 deadline. Bankers too are doubtful of the implementation of the scheme well in time for the next crop season. Senior agriculture ministry officials also said they were unsure if the June 30 deadline can be met. ���Considering the pace at which these operational guidelines are being finalised, it looks difficult that the government will be able to roll out the scheme as promised earlier.���

A source close to the development said: ���Except what has been said on the floor of the House by finance minister P Chidambaram, banks have no other detail on the scheme. Under such circumstances, bankers are finding it difficult to figure out who is eligible and who is not.���

Unlike before, farm and allied activities will be a part of the scheme. With an increase on the land holding limit up to 5 hectares and extending it to allied agriculture activities, it is possible that the cost to the government could increase substantially above Rs 60,000 crore.

���Although we have submitted broad figures to the RBI, we are still not in a position to state exact figures on the number of beneficiaries. It is already late. Our bank has several lakh of such accounts and for the industry the figure runs into several crore. We will need substantial time for implementation,��� an official in a state-run bank said.

The government had sought details on the portfolios of these banks. ���There is no clarity on the eligibility conditions for a farmer. If all NPA accounts become eligible, the extent of default in each case is not known. Accounting and classifying such loan accounts is a huge task,��� the banker said. Most state-owned banks have thousands of branches in semi-urban and rural areas. Under the scheme as announced in the budget in February, marginal farmers holding up to 1 hectare and small farmers holding up to 2 hectares, are eligible for a complete waiver of all loans that were overdue on December 31, 2007 and which remained unpaid until February 29, 2008.

A quarter of the 40 million targeted farmers will not benefit because most borrow from money lenders. Other farmers are eligible for a one-time settlement (OTS) scheme for all loans that were overdue on December 31, 2007 and which remained unpaid until February 29, 2008. Under the OTS, a rebate of 25% will be given against payment of the balance of 75%.